CDL Hospitality Trusts' net property income jumps 22.5% in Q1

WITH the easing of Covid-19 travel restrictions driving higher occupancies, CDL Hospitality Trusts (CDLHT) recorded a 22.5 per cent increase in net property income (NPI) to S$24.2 million for the first quarter of 2022 ending March 31, 2022, compared to the same period a year ago.

Gross revenue also rose 36.1 per cent to S$46.2 million over the same period, said the hospitality trust in a bourse filing early on Friday (Apr 29).

CDLHT : J85 0%, which comprises both CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust stapled as 1 entity, also saw growth in its revenue per available room (RevPAR) across majority of its portfolio.

RevPAR is a metric used in the hospitality industry to measure hotel performance.

Its properties in Singapore and Maldives were the main contributors to CDLHT's Q1 perfomance.

RevPAR for hotels in Singapore increased by 40.7 per cent year on year, and its NPI improved by 24 per cent.

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As for the Maldives, its resorts posted a RevPAR growth of 65.6 per cent year on year. NPI also improved 75 per cent as tourist arrivals went up by 44.5 per cent over the same period.

However, its properties in Australia and New Zealand did not perform as well due to continued Covid-19 developments in these markets. (* see Amendment note)

The Australia portfolio recorded a S$581,000 loss in NPI in the first quarter of 2022 as compared to the fixed rental income of S$1.2 million recorded in the same period last year.

In New Zealand, there has been a significant reduction in room utilisation rate across all isolation facilities after the government shortened its quarantine period for returning New Zealanders and progressively lifted border restrictions for non-New Zealanders.

As a result, Grand Millennium Auckland, which operated as a managed isolation facility since July 2020, registered a RevPAR decrease of 6 per cent year on year. The New Zealand segment of the business saw a decline of 24.4 per cent in NPI for Q1. 

With most of CDLHT’s portfolio markets, except for Japan and New Zealand, significantly easing restrictions, CDLHT said it continues to observe a recovery across its portfolio markets.

"Looking ahead, international tourism volumes are likely to depend largely on the return of traveller confidence and corporate travel policies. CDLHT will continue to pursue suitable acquisitions to diversify and augment its income streams, as well as evaluate divestment opportunities as they arise to unlock underlying asset values and/or recycle capital for better returns," read its business update.

Two CDLHT’s hotels in Singapore continue to operate as facilities used for isolation purposes and these contracts are expected to end by the third quarter of this year.

The other 4 are expected to be supported primarily by the return of international travellers, staycations, long-stay project groups, as well as the return of meeting groups, including major Mice (meetings, incentives, conferences and exhibitions) events.

CDLHT also said that the onset of the Russia-Ukraine war has significantly reduced business from Russia and Ukraine source markets in the Maldives. The recovery in tourist arrivals in that market had been supported by source markets such as the United Kingdom, Russia, India and Germany.

However, the company said that the impact to its Maldives property is expected to be limited as the resort has lower exposure to the Russia and Ukraine markets.

As for its financial position, CDLHT has a debt value of S$1.1 billion, a gearing of 39.8 per cent and cash reserves of about S$92 million as at Mar 31, 2022.

Gearing measures the proportion of a company's borrowed funds to its equity and is often used by investors to establish a company's financial leverage.

It also has approximately S$213.2 million of credit available for drawdown, and another S$358.7 million in short-term loan facilities available for acquisitions.

Over S$106 million has also been committed to fund its build-to-rent residential development in the UK.

*Amendment note: This story had previously stated that the increase in tourist arrivals in the Maldives was from the beginning of 2022 to March. The increase was actually over the first quarter of 2021 to the first quarter of this year. The reason for lower room utilisation in New Zealand's hotel was because of the easing of Covid-19 restrictions.